Debt management plans can work, but you have to stick with them for the long term. What does it take to have a successful debt management plan? A recent report states that the reason people don’t complete credit debt management plans is because they pay off some creditors and feel more in control or because despite the plan, they simply can’t make the payments. There are problems like a loss of income or prioritizing other commitments that can make it difficult to complete the program.
To succeed, it’s essential to understand that this needs to be a life change and not just a temporary fix. If you make it to the end, you will be financially stable and better off for doing so.
To succeed with a debt management plan, it’s likely that you’ll have to place restrictions on your budget. You might have to reduce non-essentials like spending on going out to restaurants to eat or buying new clothes. If you’ve cut out expenses everywhere you can and still struggle, that’s the point when it’s important to talk to your credit counselor about your options or to call an attorney about the potential for filing bankruptcy.
To get the most out of the program, you need to aim to make a budget that you can stick to. Keep an emergency savings account for sudden and unexpected expenses. If something serious comes up and you can’t make a payment, call your creditors or debt relief agencies. There could be temporary solutions, like payment plans or reduced payments, that can help you avoid missing payments.
Source: NerdWallet, “What It Takes to Succeed on a Debt Management Plan,” Oct. 11, 2016